Fitch Solutions forecasts the U.S. medical device market will achieve a compound annual growth rate of 4.9% over the coming years, leading to its value to top $200 billion in 2023, according to a report published Tuesday.
Fitch's forecast that the medical device market will outpace the broader economy is based on certain demographic trends and regulatory changes — including faster review times and the suspension of the 2.3% medical device excise tax — that the group predicts will fuel growth.
Still, Fitch warns pressures to bring medical device manufacturing back to the U.S. and more scrutiny of prices could cause growth to fall short of its projection.
Fitch expects higher tariffs, uncertainty about global trade and tightening credit conditions to drag on the U.S. economy in the coming years. The medical device industry is already being affected by these forces but, while they note exporters will face a tougher environment in 2019, the analysts think the sector is better placed to weather the choppy conditions than the broader economy.
Population growth, aging of the baby boomers and the rising prevalence of chronic diseases will provide tailwinds for the medical device industry through to 2023, according to Fitch. The analysts also expect FDA’s proposed Software as a Medical Device framework to benefit companies by cutting the time it takes to update and improve products.
In light of those trends, Fitch expects the U.S. medical device industry to grow in size from about $164 billion in 2018 to $208 billion in 2023. The analysts predict all segments of the device industry will contribute to the increase.
Fitch expects medical device manufacturers to achieve those growth figures both by reaching more patients and increasing per capita sales. By 2023, the medical device industry is expected to make about $615 per person in the U.S., up from $502 in 2018.
Potential barriers to growth range from the weakness of the overall economy to challenges specific to healthcare. Fitch warns the consolidation of healthcare providers, the repeal of the Affordable Care Act and political action to control the prices of medical devices could create headwinds that make it harder to achieve the forecasted 4.9% CAGR.